World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

Wednesday, January 7, 2009

Okay, since I’ve been talking up this HOG trade, here’s a couple of charts. On the left is the daily and on the right is the 30 minute version:

This is really a classic setup and I’ve been showing it just for that reason. Note on the daily the outside hammer that was above the upper Bollinger band. That’s the kind of entry that will make you money, and I should have taken a larger position, but was playing small, oh well, profit is profit, and I sold about 1/3 of my position this morning at $18 and still have the rest for now.

If you look at the 30 minute version, I have drawn in some Fibonacci retracement levels and you can see that the 50% level is at $17.73… that’s why I took partial profits at $18, and I’ll be looking to take some more if we make it to the 61.8% level. I’ll probably keep some of the position for a little longer, just in case the sell off gets legs. Remember that in general you want to cut your losses early and ride your winners. Playing with options is difficult, it is my experience that I’ll have long stretches where I’m just treading water and then the profits come in a short time period. That was definitely true last year, a good year overall, but streaky, and difficult for those who may have joined the fun a little late.

Anyway, I see that the DOW is now off about 175, and the SPX is down more than 2%, back into the 914 range. I see support in the 905/900 area and will be watching there closely.

The 30 minute fast is now oversold, the slow is about half way there.

On the SPX, the 38.2 retrace is at 910 and the 50% is at 900. Here’s chart: